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Sustainable future - common responsibility

"How can diplomacy help to embed sustainability in business?",  Minister of Foreign Affairs Ine Eriksen Søreide asked in her opening address at Global Outlook during the Arendal week.

Check against delivery

Ladies and gentlemen,

This is a plastic ball-point pen. A simple object that would not have existed without our global economy. And that symbolises some of the best characteristics of the global economy: initiative and innovation, international trade and open markets. It was probably produced in the most cost-effective way, drawing on resources, capital and labour from different parts of the world.

But it can also be used to illustrate some of the more negative aspects of our consumer oriented societies. Imagine that this was someone else’s pen and that it drifted ashore here in Arendal a few days ago – far from where it was supposed to be. If left in the water, it would ultimately break down into hundreds of fragments of microplastic.

It is a reminder of our responsibility as consumers to dispose of our waste in a responsible manner. But it is also a reminder of our powerlessness in the face of cross-border challenges, unless we join forces to address them.

The time we are living in is full of paradoxes like this. We have attained an unprecedented level of technological sophistication. We probably have a better chance than any generation before us to reduce poverty, disease and human suffering. But more than ever before, our ingenuity also seems to be the cause of many of the problems that we have to resolve.

We have achieved a level of international cooperation that previous generations would envy. But our interconnectedness also seems to be providing increasingly fertile ground for actors that oppose globalisation and multilateralism.

We have to find a way to manoeuvre around these dilemmas. Fortunately for us, unlike this piece of plastic, we are not doomed to drift around until we end up in some random place. The essence of political participation is that we can all make decisions – as citizens, companies and politicians – that will influence our course and direction. And when it comes to promoting sustainability, we certainly need our very best navigation skills.

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So what role can foreign policy play in promoting sustainability? How can diplomacy help to embed sustainability in business?

I will argue that the role of foreign policy is more important than ever, and that the fight for sustainability is linked to some of the most fundamental foreign policy challenges of our time, such as the rise of populism, the pressure that is being put on multilateral institutions, and the changing security landscape.

The world order that has served us so well since World War II has recently come under increasing pressure. It is crucial that we defend it. However, at the same time we have to adjust and develop it in such way that it can accelerate the shift to a greener and bluer economy.

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The pressure on our existing global order is coming from a number of different quarters. Many people criticise our global order, while forgetting the progress made over the past decades. The fact that more than one billion people have worked themselves out of poverty since 1990. The fact that our security architecture has enhanced security and stability. And the fact that international law and institutions have brought us together to address the major challenges of our time.

Other people leave growth out of the equation. They preach a radical environmental message, but often fail to present a credible path to reaching the remaining 16 sustainable development goals.

And some people seem to cling to the idea of a glorious return to closed economic systems, ignoring the historically dire economic and environmental record of systems of this kind.

I remain convinced that open global markets are not only compatible with a sustainable future, they are indispensable to it.

Last year, the UK’s CO2 emissions fell to their lowest levels since 1896, a feat that can partly be attributed to Norwegian gas being used to replace coal and increased renewable energy production from Norwegian offshore wind-farms. In fact, the cuts in the UK’s emissions enabled by gas imports from Norway and offshore wind production corresponded to almost 50% of Norway’s annual emissions.

This is an achievement that quite simply would not have been possible without open markets.

Likewise, without open markets, there would be no common Nordic electricity market. Or – to use a more mundane example – no Teslas on the former site of the world’s most famous bus station/rutebilstasjon – right here in Arendal.

We must not lose sight of the benefits of globalisation. Despite the imperfections of global markets, they still enable the most cost-effective solutions, and provide the most efficient way to develop and commercialise the technology we need to solve the challenges at hand.

Trade policy remains an integral part of the Government’s policy to promote sustainable growth, both at home and abroad. We have a fundamental interest in maintaining a strong multilateral system with the World Trade Organization at its core, and clear rules that minimise the likelihood of misuse and ensure maximum transparency, as well as an effective dispute settlement system.

Weakening the institutions and agreements that underpin a level playing field is neither a viable path to sustainability nor good for business. It could distort competition, reduce our ability to regulate, and trigger a race to the bottom that would result in vast environmental loopholes.

Trade agreements allow us to help shape the course of globalisation through international cooperation: To maximise value creation while at the same time contributing to global growth and sustainable development. This is particularly important in a time of considerable geo-economic and geopolitical tension.

An important first contribution to sustainability, then, from a foreign policy perspective, is to defend the World Trade Organization and the broader trade system against protectionism.

If we are to succeed in our transition to a greener and bluer economy, we cannot afford to waste our resources on unnecessary subsidies, trade barriers or trade wars. Nor can we disregard the importance of the global economy if we are to provide food, health services, education, prosperity and welfare to a world population that is set to grow to almost 10 billion people by 2050.

Global markets are also crucial for our ability to tackle the future consequences of climate change. Here in Norway, the summer of 2018 has been among the warmest and driest on record. The winter was also remarkable in various ways. Unfortunately, we have to prepare for more scenarios like this.

The World Economic Forum’s 2018 Global Risks Report lists extreme weather events and natural disasters among the top five global risks in terms of likelihood and impact. I believe globalised economies stand a far better chance of adapting to extreme weather events than countries that can only rely on their own resources.

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While openness to trade is necessary, and this is my second point, it is not sufficient. Unregulated globalisation can deepen poverty, widen inequality, trigger new conflicts, and fuel climate change.

Therefore, we need regulation, including regulation that extends beyond the scope of trade. And we need international agreements and institutions that can translate words into action.

The Paris Agreement is a milestone.

International cooperation is essential for achieving global climate change objectives. The Government is committed to reducing CO2 emissions by at least 40 % by 2030. Norway is in dialogue with the EU about joint fulfilment of the 2030 climate target. We aim to agree on the main principles by December this year.

The EU emissions trading system is a key European instrument for reducing carbon emissions. Approximately 50 % of Norway’s greenhouse gas emissions are covered by the EU ETS, which encompasses land-based industry, the oil and gas industry and aviation. The revised Emissions Trading Directive for 2021-2030, will strengthen the incentives for low emission development  and more innovation.

Another area of interest for Norway is shipping. Oceans are the highways of the global economy. 80 % of global trade is carried by sea. In fact, had the international shipping industry been a country, it would have been the 6th biggest emitter of CO2 worldwide.

But international shipping was not included in the Paris Agreement. Earlier this year, however, we reached an important milestone. Members of the International Maritime Organization agreed to reduce emissions from international shipping by 50 % by 2050, and to move towards carbon neutrality by the end of the century

Diplomacy is an essential tool. We need agreements like this if globalisation is to be more in tune with the needs of our planet.

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But while we can pave the way for sustainable practices, we cannot achieve the desired results without the participation of the business community. Successful implementation of frameworks such as the Paris Agreement and the Sendai Framework for Disaster Risk Reduction call for active private sector engagement.

The role of the business community should never be that of passive responder. We need a vibrant business community that is prepared to adapt and innovate. This is very much a two-way street. Regulation can certainly set the stage for innovation. But innovation can also broaden our political options, inspire new legislation and spark change at a societal level.

Major technological shifts bring new challenges. They can cause significant structural changes, including the loss of jobs. They can generate uncertainty and fuel anti-establishment sentiments, not unlike what we have seen in the wake of globalisation.

But major shifts can also create numerous new opportunities. History holds many examples of this, such as the transition from steam to diesel and electricity in the transport sector, or from electronic to digital technology.

I am hopeful that the transition to a greener and bluer economy will give rise to similar opportunities, including here in Norway. And I am quite confident that our business community will seize the opportunities that arise.

In recent years, we have seen how the sharp fall in oil prices has contributed to a restructuring of the Norwegian ocean industries – maritime, oil and gas, fisheries and aquaculture – the so-called blue economy. Businesses are increasingly applying expertise and technology across traditional sectoral divides. This is particularly evident in the emerging offshore aquaculture, offshore wind and marine biotechnology segments.

The shift towards a more integrated blue economy brings with it the need to ensure the sustainable use of the oceans. In 2017, the Government presented its ocean strategy, in which the sustainable development of the oceans is a key priority. The strategy sets out policies for restructuring the ocean industries with a view to promoting economic growth in new areas and contributing to the achievement of our climate commitments. And as most of you know, in January the Prime minister launched a High-level Panel on a Sustainable Ocean Economy.

Embedding sustainability is a question of grasping new opportunities. But it is also a question of risk management. Today businesses have to take into account the risks posed by climate change and its effects. And I am glad that over the years, the Government Pension Fund Global has worked to increase knowledge and reporting on the risks posed by climate change.

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So far, I have stuck to a fairly traditional understanding of sustainability, as a relationship between economic interests and environmental concerns. But let us broaden the perspective.

A major breakthrough in our understanding of sustainability during the past decade has been the realisation that true sustainability cannot be achieved in a vacuum. True sustainability can only be achieved if, for example, we manage to eradicate poverty, reduce social differences, provide education for all, promote gender equality, manage conflicts and fight corruption.

This realisation is based on hard facts. You can have all the regulation in the world, but fail to apply it because of conflict or the absence of the rule of law. Regulation can be undermined by corruption, remain ineffective due to a lack of education or be overshadowed by more pressing social or economic concerns.

As I mentioned in my introduction, the issue of sustainability is linked to some of the most fundamental foreign policy challenges of our time, including challenges relating to security policy. Over the past few years, instability has taken hold of vast areas south of Europe, and we are seeing greater uncertainty here at home, too. This is not only a security concern. It is also bad for the planet.

Conflict and instability are some of the worst enemies of sustainable development. They can reverse years of social and economic progress. They leave vast areas unregulated, ungoverned and unsafe. They threaten human life and biodiversity. They lead to the destruction of national parks and livelihoods.

What is more, instability diverts our attention and our resources from other pressing issues. And it can undermine trust between nations. The very trust we need to reach agreement in important international forums, such as the UN Security Council.

So conflict prevention, peacekeeping, confidence-building and disarmament are also important contributions to sustainability from a foreign policy perspective. Stable countries stand a far better chance of attracting responsible businesses.

The understanding we have gained of the relationship between sustainability and other factors has highlighted how interconnected the key concerns of industrialised and developing countries are. And it has paved the way for a common roadmap towards the future we all want: a future in which we have reached the Sustainable Development Goals and implemented the 2030 Agenda.

Engaging the business community in this endeavour is perhaps the most challenging part of embedding sustainability in business. But possibly also the most important one. Business decisions that directly promote the achievement of the SDGs may not always be profitable in the short term. In many cases, embedding sustainability in business will mean going one, two or perhaps even ten steps beyond what is required of companies in a strict legal sense.

But without the involvement of the private sector, we will not be able to meet the SDGs. A profitable and responsible private sector is a cornerstone of any sustainable society.

Foreign policy practitioners – diplomats – develop and promote global standards for business conduct. This is one way in which foreign policy makes a meaningful contribution to sustainable development.

The Government expects all Norwegian companies to adhere to responsible business practices wherever they operate. This includes being familiar with and applying the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The OECD Guidelines cover 90 % of world trade. They cannot be dismissed as only relevant to developed countries.

Norway pushed for the development and adoption of the UN Guiding Principles, and we still play a leading role in the Human Rights Council on this issue. Promoting human rights is a matter of understanding and overcoming very practical challenges.

When these guidelines and principles are properly applied, they ensure that all workers have a decent wage, secure employment and the peace of mind that comes with knowing they will return safely to their families at the end of the working day.

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I started off by showing you my plastic ball-point pen. Now, the question is not what it is but what we want it to be: is it just a piece of plastic or is it a piece of the bigger puzzle?

When we see it lying on the beach, do we pick it up or leave it where it is?

In order to achieve sustainability, we all have our part to play. Big or small.

I am confident that foreign policy can make a difference. Multilateral institutions and cooperation are now coming under unprecedented pressure. But we should remember that these institutions were designed to withstand pressure and address seemingly insurmountable challenges. Challenges that are too great for any single nation, person or company to address on their own. Challenges that we can only meet if we join forces and pull together.

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